Adam Salzer and the ATTA Transformational CEO white paper
Adam Salzer, OAM, Chair of AusTTA, Chair of Salzer Consulting
It's hot of the press, the Australian Transformation and Turnaround Association has released a very provocative white paper which we're going to talk about. The white paper is called The Essential Best Practices for Transformation Boards and CEO's: White Paper Insights for Business and Government Leaders on How to Drive Successful Organizational Transformation. It's a big name but there's pretty punchy content in it.
Jen: I am really thrilled to have with us at the moment Adam Salzer, who is the Chair of the Australian Transformation and Turnaround Association and also the Chair of Salzer Consulting. Adam, to his immense credit, has over 150 transformations to his background there, over 25 years. One, I'm very grateful for his time, and two, I don't think we can get anybody who is more in the know about transformation to join us. Adam, welcome to Conversations of Change.
Adam: Thank you Jen, it's lovely to be here.
Jen: Adam, you've been doing ... tell us about the association to start with. It has had a meteoric rise from when you first raised the idea to what it is doing now. Can you give the listeners a bit of insight about what it's about?
Adam: The, what we call AusTTA, Australian Transformation Turnaround Association, is designed to be a professional body of professionals. It's very different to an industry association so if you think about RACV or NRMA as industry associations and then you think College of Surgeons, that's where we are, on that professional side. It's identifying, what are the capabilities required to lead major transformations, and then professionalizing those skill sets. So transformation is really taking organizations from its existing state to a totally different state in the future, often multi-year. So it's different business models, different technology, all those things. These are people that have experience in doing that and what's interesting about them is they're largely self-selected and self-taught. What we're doing is we're professionalizing that skill set.
Jen: Tell me a little bit about the 'self-selected and self-taught'. Can I just check, are these internal to the organization or are they primarily external to the organization?
Adam: We have about 2,000 people on our Linkedin closed user group so it's a reasonable size, of which 20% are Board and C-suite, 40% are embedded transformational leaders and 40% are external consulting ... so it's a good mix and a variety of industries. What we've done is we've gone out there, we've networked out and we've brought people in. It's not change management, it's the next step up, it's taking the entire organization, where you're looking at, "How do you move from your existing business model to your new business model? How do you bring in the disruptive technology? How do you create new ways of working? How do you manage the ethical issues of this major transformation that happened?"I'll give you an example, I'm working with one at the moment which is in 14 countries, 12,000 people. Their business model ... they've left it too late, their business model has moved into a tipping point, it's accelerating down. We're having to re-invent a new organization, new technology, at great pace. What should happen is that it should have happened maybe four years ago. Often people leave it too late, so this is the issue. The idea is to take this self-selected ... self-selected is, you've been there leading a transformation for whatever reason and you find, you did well. You find yourself leading another one and it's entirely different. By the time you've done three, you realize that there's a framework underneath it, that you've got an aptitude, that you like this environment, the pressure, the risk management, the courage, all the issues that need to happen, and the responsibility or taking organizations through this journey.We have practicing members which are our core membership, you've got to have done three or more transformation ... led, designed three or more transformations. That is assessed by our peer group, and we're part of a global movement, similar organizations in other parts of the world. We're heading towards charter status, I've actually been a charter transformational leader. We are developing this charter status and to do that you've got to have professional qualifications, you've got to ... there's various other things you have to do. We are benchmarking across the world in this area, which gives us an insight as to what's happening in this area of leadership in Asia and Europe and the US.
Jen: Tremendous, tremendous. Okay, lets get on to the white paper. Tell me about the research methodology, how did you come to have this body of work?
Adam: Let me just jump back inside AusTTA, because it's taken off so fast, what we've done with that sort of core membership, we've split it into guilds where different people focus on different areas. This is our transformative guild area, which I'm the chair of that as well. As opposed to diversity guild, there's a government guild, there's various other guilds where people are leading debate and discussion.So this one, it grew out of an initial analysis that showed that many of the legacy organizations were being held back from being transformed, going down their transformation journey of reinventing themselves in an appropriate fashion. They were being held back by their Boards and their C-Suite. So that was the initial trigger for the research. We then did a series of surveys, a series of round table think tanks with CEOs and Boards and Chairs, we did analysis of articles and 50 peer interviews of different leaders and then looked at 200 case studies of our practicing members. It was a reasonably sized qualitative research to look at what was wrongs with Boards, why weren't they leading their companies into it. Here, for example, look at every bank, look at every telco, a lot of noise, but actually they're not changed. They're not transformed, there's a lot of noise, but there's difference between a genuine reinvention and talking about it. It comes back to the Chairs and the C-suites and the Boards.
Jen: What do you think were the findings that surprised you the most, based on this long career in transformation, what were the surprises in the findings?
Adam:
The biggest finding, which was surprising and horrific was that transformational leadership is different to operational leadership, operational leadership is what leads most organizations ... they improve their organization 2%, 3%, 5%, improving the organization. Transformational leadership has got a different mentality, different skill sets, which gets turned on with major changes, 30%, 40% changes. What came out of our study is that, if you do not have a transformational leader as the Chair and as the CEO, any transformational initiative will fail.
Jen: Wow.
Adam: Now that's big, that is really big. As I said, every bank ... as I said, because ... don't give up, because when we look at best practices, the whole point of looking at best practices of transformation boards, there are some very good boards with great practices. Primarily, boards of companies that are backed by private equity.
Jen: Interesting, tell me more.Adam:The reason for that is that if you are going to take your organization into this new world, it requires a lot of courage, it requires a different approach to risk. You need to be able to keep your foot firmly on the accelerator even though you often don't know where you are going. It is a different world and our existing boards don't have that capability, especially in the Chairs, in the Chairs is where we're actually aiming our guns, primarily. You talk to the Chairs and they have really difficulty bringing diversity on the boards, I don't mean gender diversity, I mean sort diversity. Quotes like, "I wouldn't be able to control them", you go, "Yes". The Chairs are selecting CEO's that are operational, they themselves are putting in Boards that are fundamentally risk averse and do their jobs as avoiding risk, as opposed to ... there are some good examples where you've had chairs and boards that have gone down a very different path.I can give you examples of both NRMA and RACP, both of them have chairs that have come in, seen that the subscription model is not for the long term, have reinvented their organizations, put leaders in and CEOs that are taking them into a new world in a very rapid fashion, so it can be done. What it is, is we're holding up a mirror to all our society saying, "Excuse me, you're not able to go down this path". If I can just divert for a second to reinforce this point, there's a research group coming out at MIT in the US, that is researching transformational leadership and it's created a framework for transforming large, complex organizations. They got a hundred organizations and they worked with the boards and the chairs and it's really very good work. One small problem, none of them are transforming. The reason being, the framework is fine, but if the leadership isn't of the right mentality it never will happen.
Our finding is that you have to have transformation expertise in the Chair, the Board, and the CEO, if any one of these is operational, the transformation will fail, full stop.
Jen: It's quite the challenge then, from a supply and demand perspective. My immediate thought is, on hearing this, okay, excellent opportunity for transformational leaders, but do we have that many?
Adam: We've done an analysis, we think there's about 400 in Australia, so it's not a lot. What we're saying is, we don't expect boards to change, they're pretty rigid, entrenched structures. I'm not just talking about boards of private, listed companies, but I'm also talking about boards of government instrumentalities.
Jen: Agencies.
Adam: Agencies, the utilities, etc. What we're saying is, we get ... first of all, you've gotta understand if you don't have this capability, it won't work. It doesn't matter what you do, it'll end up in noise. The reason for that ... just to punch that home, is that if you take a 40% change and reduce it to forty 1%s, you won't get there. That's really where it breaks down, if you look at that's the way the banks are operating, they've got lots of little changes coming in but it's not getting to the core. You don't reinvent yourself without that courage and different risk profile.
Adam: So looking at, how do we do that, our suggestion is, we've made a submission with regard to Australian Public Sector Review, is that bring transformational leaders to sit alongside you at the top end of your organization. They've been there, they've done it. This is not strategy, this is the reality of reinventing your organization and it covers many different things. Being these people in at a high level and then start to train up your people accordingly and start to realize that you're gonna have to behave differently.
The idea is, put these people into board advisory roles, not necessarily board roles, but board advisory roles. Sitting alongside the C-Suite, alongside the board and help the organization find their way through.
Adam: Actually, when you've made that decision, it's possible. I'll give you another example, Barro, that is building products company, does cement and all sorts things in mining. Their CEO and the board have said, we're no longer going to be a building products company, we're going to be a technology company. As a result of which ... when you've made the decision, then you start moving towards it, but you need that big, clear strength to take it down and then you can guide it through the organization.
Jen: One of the things that I found really curious in the findings, which it resonated with some of what I've seen with the organizations that I've worked with, it noted a real lack of urgency in Australia. I was curious about this, I was like, okay, so is this cultural? Our, "She'll be right, mate", or is it because we're isolated from the rest of the world in trade? What does this lack of urgency mean? Is it specific to Australia, or transformation in general?
Adam: Let's look at cause and effect. First of all, cause is that we have been through 28 quarters of growth, so there is a level of complacency, especially in the larger end of town. The Telstras And the Commbanks. There is a, "As long as we keep our gradualist approach, it'll be fine." I think that there's a buffer as opposed to in Asia and in Europe, and in the States, they can see that tomorrow is going to be very different and if they don't reinvent themselves quickly, they're going to be left behind. It's a totally different mentality.One of the issues is, "How do you get urgency onto a board?" What I find interesting is, a lot of the people, when to talk at the top end, they can see the future, they know what needs to be done, they can see the challenges, but there's not that sense of urgency. It comes together with a sense of urgency that needs to be brought in, in other words, "We've got three years and if we don't get this done in the next three years we're going to be left behind. Now, what are we going to do in the next three months?" That's the bit that's missing, which these skill sets can come in.The other one is, look what will happen if you don't do it. The opportunity cost is significant. And do it quickly. What I see the effect will be is that a lot of organization will move into crisis at some stage, because what's happening ... the biggest issue is not digital disruption, but the business model disruption that's happening. As the business model changes, if you're not up there with it you can get marginalized very quickly. I'll just give you a quick example. Federal government, who we've been doing quite a lot of work with, Federal government has significant challenges, for example the gig economy, they've fallen through our safety net. They're not part of our social safety net at all, but apart from not taxing properly, but there's also the safety net is not there so we're getting this growing part that hasn't happened, that hasn't been catered for.On the other hand, you've also got people expecting to use their mobiles to shape their world into where they want it. They wasn't to shape their relationships with government into something they want. Again, government is nowhere near it. These are major challenges and they're stuck, if they don't start to really get moving they will be marginalized, they'll be other things that come in place and the government will be on the side. Again, this complacency thinks, "Because we're government, we're gonna be there." Actually, that's not the case, other forms will come in. Same way the banks will do it gradually, but then there are things coming thru that are going to totally cut to their core of the new way of working.A lot of what we're doing is saying, "Look, there's this need for stopping thinking short term and starting to think and take responsibility and courage and communication to take your organizations into this new world". One of the areas we're also, in the paper, we're holding up to is ... we're holding up a challenge to the superannuation Industry. The funds management industry, we're saying to them, is that at the moment they are seeking annuity flows, that's becoming the discipline of the big end of town. They're not saying, where are your real growth strategies? You need both, you need growth strategy and you need to back companies that have got these bigger pictures. There's not a public sharing of our transformational vision, like I was talking about Barro, this should be all around where are we going, and held us accountable.It's everywhere, you look at, for example, legal companies with AI coming in. It's going to totally transform them. Are they any discussion about what that real journey is going to look like in the next three years, in three month chunks? No. It worries me that if you don't do it up front ... unfortunately quite a lot of the companies that I work with have left it too late, then you're really scrambling.
Jen: I think you're right. One of the next interviews coming through on the podcast series is with an Executive Director in a legal firm and we talk about that. I think it's really interesting because like legal firms, the ones who will win in this are the companies that are small. If you're a smaller legal firm you've got that nimbleness to pre-crisis, do something about it, but once you're these big behemoths, shifting things around at speed is pretty difficult to do.
Adam: I'll take that one step further, Jen, stay with me, I think that that's in any industry. In any industry, #1, #2, #3, #4, #5, are not going to make the ... number 6, 7, 8. They've got the transformational leadership, they've got the courage, they've got the risk management, money is no object-
Jen: And they've got the hunger, they need the hunger.
Adam: They've got the hunger, yes. It's interesting, money's not an object because in this transformational process, within your existing business you can release funds to be invested in the future, but it's the will. It's the will. When you've got the will, which is a transformational leadership mindset, actually the rest of it follows.
Jen: Terrific.
Adam: That's the discussion we're trying to generate.
Jen: Yeah, absolutely. There was one thing that got my back up as I was reading it. I was like, "Ugh, once again, this is why transformation needs to talk more with change management." The research paper notes that organizational transformation is painful, and it talks about the stress caused by change. My challenge is, does it have to be or is this a reflection of the lack of transformation expertise or the integration of organizational change and OD into the space?
Adam: A big question, first of all, one of the directions of AUSTTA is to minimize the distress and maximize the benefit of transformation. Distress is there because there is going to be change in capabilities required when you're rebuilding organizations. It just happens, how do you manage that? There is a way of managing that where you reduce the distress. In other words, you don't hide it, it's a public discussion, you care for your people, you look after the fabric of your organization, you take responsibility for the journey. There still will be some winners, some losers because of the nature of what you're doing but there's ways of significantly reducing the distress. I think that that's one where you need the capabilities to come in and make sure that you take that journey.I go into organizations and I find that I talk to senior people and they have one set of answers, then I talk to the front line and their answers are always much better. The front line knows ... they're not stupid, they know what is happening, they want to be helped, they want to go down that journey, they need to know what their roles are, what they're going to be there, what's going to be there for their children, and get on with it. Hiding it behind closed doors at the board or making it a mystery is so wrong, this is a full organizational transformation you're talking about. If there's clarity then everybody can contribute. That's why I think things go wrong. The other thing is, there's been so much noise in organizations in the past so one of the difficulties when you start a transformational journey, to say, stop, how do all these things fit in? How is there one story for this company going forward? Yes, there's going to be lots of different aspects of it, but let's actually bring some clarity.One of the things that we've done, we've had to go back and look at, what is transformation? And start some training courses, for example, some things like risk management is different. Technology, how do you get past the gee whiz part of technology? How do you manage the discussion and the communication on the way through? There's many things that need to be put out there that ... how do you measure whether you're traveling on time or not? How do you manage strategy when you don't know where you're going? This is one of the big areas, a big one to manage, it's hard because nobody knows what the business model of the future will be or the technology, but we can't wait.So yeah, it's a tough area and what we're saying is that some people have got a capability to be able to assist these companies going forward. We need to identify when that we're putting a quality brand on people to say-
Jen: You know where to find them.
Adam: Well, yeah, it means that these people can actually help. It's going to be difficult, but don't leave it, get moving on it. Sorry Boards, it's time to really say, we have to take responsibility for reinventing this organization. Nothing is going to be the same, not government, not utilities, nothing is going to be the same. That's a tough listen and a tough pill to take, but once you've taken it, it gets easier.
Jen: There's one more thing in the paper that stood out to me. You've spoken a lot about the courage required to do transformation and you've got a six point list that defines experienced transformational leaders. One of these is, "They are innovative, courageous, and efficient problem solvers". I did a bit of a double take on that, 'cause I was thinking, "Where does efficiency fit in with innovation and courage?" I was like, "Wow, There's a real big tension in holding those three spaces together."
Adam: Let me weave them together for you. In transformation, you have an existing organization, most people think transformation is taking technology and making that organization better fit for purpose and starting to reinvent it. That is part of transformation, the other part of transformation is, how do we get ourselves ready for this unknown technology, unknown business model, which is quite different. Which is where you've gotta try things out, fail, do all sorts of things. There's going to be a lot of feeling your way through before you hit it right, as to what's going to happen to you in the future. That bit tends to be forgotten but needs to be put on the table, so that's the courage. To actually say, "We don't know where we're going, but we have to be open and try to find our way through." The Chinese say, we have to cross the flooding river by feeling for the stepping stones. Okay, so there's that one.Then you've got your existing organization, and you do have to release funds because that's going to be an organization that over 3, 5, 10 years, is going to diminish so you have to keep putting it in. Now that doesn't mean you make less money or you get smaller, quite often there's consolidation in industries, there's other things you can do with it where you're running that, which I call the turnaround aspect. You're turning it around and doing things with it, releasing funds for this new way and you'll move out of some parts of the industry as you go forward. That's the efficiency part, as well as the rest of it.Over all of that you've got to have the clarity, vision, and communication that does two things. One is, your stakeholders ... I note your podcast on stakeholders. First of all, you've gotta manage your direct stakeholders, investors, or owners. So you've gotta manage government if you're in government, you've gotta manage your advisors, etc, you've gotta mange that side. Then you have to manage your organization and give it a sense of purpose in this new world. Here, it has to be a social purpose. It cannot be, we want to make more money by doing things differently, that's not a license to survive. You have to be able to find, how do you contribute to society differently in this different world?There's some big issues that have to be addressed, but fast. You can't sit there contemplating them. What we're saying is, this whole thing is, holding up this paper and saying, "Sorry, we have to talk about this. It's not good enough to just let time pass, we have to talk about it. It's happening, if you don't get your act together you will become a dinosaur. Sorry, that's the world. How do you get there? How do yo manage that? Let us have that discussion." We don't have all the answers but we know the discussion has to take place.
Jen: Sure. It is sounding like a bit of a death nail for the CEOs and board members at the moment, of many companies. By way of wrapping this up, what would be your wish to be on an agenda item next week for the boards that are meeting?
Adam: How do we move ourselves into being a transformative board? And then, look at what is a transformative board, look at what they are now, and look at how they can move forward. It's not going to happen quickly but we can actually get someone on ... this is not about having more reports, this is not about new strategy documents coming from different strategy houses. This is about saying, we need to reinvent this organization or we're going to die, we've got to become a transformative board. Let's bring in some people to talk us through this and let's move on this journey. Then within six months, they should give them this deadline, within six months they can announce publicly their new journey.
Jen: Wow.
Adam: If they don't do that, they are going to become part of history. Not noise, this is where I've gotta be very careful because this is, lifting up an organization and creating a new organization, as opposed to fiddling with this one. As I said, the big transformation, the turnaround of your existing organization's going to happen, but it's not the future. The future's gonna be this other unknown unknown, and we don't know what it's going to be. At the moment, that seems to be accelerating towards us extremely quickly and we have to ride it. If we don't, disruptors will come and these organizations will be left behind.
Adam: If you remember some of the early days of the internet, where AOL bought Times Warner, that's what's coming through and we need to help the Times Warner's of the world to reinvent themselves to be part of that future.
Jen: I'm up for that challenge, thank you for bringing it to the forefront. People who want to ... I imagine this is going to stir up a lot of conversation across corporate and governmental Australia, where can people go to continue the dialogue, or start to have people come into those conversations?Adam:There's three places. One is, email me - adam@austta.org, which I'm sure will be on your site.The other one is, look at our website and become a member. Then you ... the way people describe it is, finding their family. If you are a transformational leader, it gives you the ability to meet people that you can have dialogues with in a very advanced fashion very quickly.Next one, we have a Linkedin site which is a closed user group, AusTTA Linkedin group, if you apply for that and get admitted, that's where some of the best dialogue is taking place. Really knowledgeable people are putting things in up there that are creating deeper debate. So there three ways.
Jen: Tremendous. Adam, thank you so much for your time this morning, I think this is an incredibly important piece of work for all of us so I thank you very much for the work that you do in leading this community.
Adam: Thank you Jen and thank you for being interested in being a co-traveler along the way.
Jen: Pleasure. Listeners, if you've enjoyed this, you know what to do. Head over to iTunes, leave a review, that way it's easier for other people to know. If you know of a company that you think should be going through transformation, perhaps you're in there at the moment or you've had dealing with them as a customer, this might be the podcast interview that you want to flick over to them. Thanks for joining us, we'll see you next time.